Zoltan Gal (p), Magdolna Sass (p)

Tereza De Castro

In the rapidly evolving economic landscape, the concept of sustainability has expanded to encompass environmental, social, economic, and governance dimensions. This presentation explores the intricate dynamics of Global Value Chains (GVCs) dependent Foreign Direct Investment (FDI) development in Central and Eastern Europe (CEE), historically integrated through vertical FDI and specializing mainly in lower value-added activities along the smile curve, particularly in production and assembly segments (Nölke and Vligenhart, 2009; Rodrik, D., 2018; Mańkowska, M., & Knaggård, Å., 2019; Szalavetz, A., 2018; Pavlinek, 2022; Gáspár-Sass, 2023).
Drawing on theoretical perspectives, analysis of the current literature and meta-analytical methodologies, this paper investigates the transformative impact of GVC-dependent FDI on the development of countries and regions embedded within Global Production Networks (GPNs) (Gołębiowski, T., & Jarašūnienė, A., 2018; Gáspár, T., Sass, M., Vlčková, J., Koppány, K., 2023). The meta-analysis synthesizes existing theoretical frameworks, providing a comprehensive understanding of the complex factors influencing GVC dynamics and their diverse consequences for the development of CEE regions, including the sustainability dimension.
The empirical component leverages data from the Atlas of Economic Complexity to measure economic complexities within GVC integrated regions, utilizing indicators such as supply chain resilience, innovation networks, and trade dependencies (Gál-Lux, 2022; Éltető, Sass, Götz, 2023). The Economic Complexity Database offers detailed insights into the economic capabilities and structures of the integrated regions.
Recent disruptive events, including the 2008 financial crisis, the Covid-19 pandemic, geopolitical conflicts and deglobalization trends challenge the integration of CEE regions into GVCs. Furthermore, their GVC-based integration and development path, partly due to these external developments, seem to reach their limits in providing growth engines for the CEE economies. The presentation highlights domestic economic policies responding to these disruptions, aiming to reduce external dependence and promote domestic growth. Despite efforts, enduring center-periphery dynamics, trade-offs, and limitations within the GVC-dependent FDI model are identified, potentially hindering long-term convergence goals and leading to a middle-income trap.
This paper proposes alternative models to mitigate risks associated with the GVC-dependent FDI development path, emphasizing the need for sustainable strategies (Gál-Lux, 2022). By addressing challenges arising from over-reliance on FDI and subordinate positions within GVCs, the presentation contributes to the development of more resilient strategies for emerging regions in the global economic landscape, offering valuable insights for policymakers, businesses, and researchers alike (Éltető, Sass, Götz, 2023).

Magdolna Sass (p), Brenda Murillo Villanueva, Krisztián Koppány

Zoltan Gal

Hungary and Mexico are highly integrated into global value chains, mainly as ‘factory economies’, i.e. specializing on backward global value chain participation with mostly in manufacturing and production activities with low to medium value added and in certain sectors (automotive and electronics industries). They rely (at least in the analysed period) on one leading, main partner in their global value chain participation: Hungary on Germany and Mexico on the United States. Furthermore, their economic growth is highly dependent on their insertion in global value chains. Their growth model can be characterized as one relying to a great extent on global value chain participation. The objective of this paper is to analyze the contribution of manufacturing exports to total domestic value added in Mexico and Hungary from 1995 to 2018 distinguishing between the direct and indirect domestic value added to recognize how the two countries with similar insertion in regional value chains, generate national income. Data from the Trade in Value Added (TiVA) database was employed in this paper and various statistical techniques are used for the analysis. The results show similarities between the two countries regarding export profiles and regional value chain positions, but differences in terms of the contribution of manufacturing exports to domestic value added and its source.

Jana Vlckova, Tereza De Castro (p)

Magdolna Sass

This paper discusses the multifaceted impacts of the War in Ukraine on the internationalization strategies of Czech small and medium-sized enterprises (SMEs) within the context of GVCs disruptions. The study particularly scrutinizes the state's dual role in this context, acting as both the regulator imposing sanctions and as a pivotal actor providing support mechanisms to alleviate the adverse consequences of the conflict on SMEs. The sustainability of existing and future trade linkages among stakeholders can be undermined by various threats, including high energy prices, export sanctions, unavailability of critical raw materials and components, ongoing supply costs, and challenges in financing, namely accessing credit and loans. Conversely, potential opportunities have arisen from the influx of Ukrainian refugees as a new labor force, an increase in arms exports, and prospects for participating in the reconstruction of Ukraine, potentially enhancing the international reputation and business ties of Czech SMEs with Ukrainian counterparts.

The research methodology employed incorporates trade data analysis, firm-level data, and interviews with representatives from relevant Czech institutions and associations. By employing a multi-dimensional approach, the paper aims to offer a comprehensive understanding of how Czech SMEs navigate challenges and leverage opportunities arising from the conflict in Ukraine. This investigation contributes to the broader discourse on the dynamic interactions between geopolitical events, state interventions, and the strategies adopted by SMEs in their internationalization endeavors.